Contractors: we need you to build homes

The chancellor’s Autumn Statement came and there were a few treats for the sector. One of the most interesting of which was the raising of borrowing caps raised for local authorities. Although at £300m it’s not big numbers, it indicates that local authorities are being encouraged to build again.

Then we had the mayor of London’s housing strategy out for consultation and in it a recognition that the affordable rent product introduced for the last Homes and Communities Agency bids round doesn’t meet all of the housing needs in the capital. The strategy also sets out a vision to deliver 42,000 new homes a year, over the next 10 years. It’s probably 8,000 homes a year too little, but in proposing to almost double current output, it shouldn’t be sniffed at.

All around us are big numbers and ambition. The London Borough of Southwark has announced it would like to deliver 10,000 new homes. The London Borough of Newham trumped that ambition with a target of 20,000. Manchester, Leeds and Birmingham have all declared that they are building or will build, and build at scale once again. The London Borough of Hackney already has a well established programme.

There are already examples of SME contractor/developers such as Hill Partnership, Mullalleys, Keepmoat and United House offering a new delivery relationship

And Labour have just kicked off a major review of housing, led by Sir Michael Lyons, with 1 million homes in their sights. So despite losing both a minster and his shadow, it feels as though the new era is bringing a new level of interest in housing.

This is all good progress. But there is going to be a tricky question about who will deliver all of these potential new homes. Can the sector gear up to deliver this sort of scale and this type of pace. Also will the sector want to?

Local authorities will have the ambition, but initially at least, will not have the capacity to deliver. Traditional housebuilders are unlikely to have the desire to double their capacity at the rate needed. There is a golden opportunity for a new range of delivery partners to come forward.

The answer to delivery is likely to be contractors who can deliver homes for sale as well as contracting services; housing associations, both big and small, who are prepared to take on more development risk and reinvest in local areas. There are already examples of SME contractor/developers such as Hill Partnership, Mullalleys, Keepmoat and United House offering a new delivery relationship. The likes of Galliford Try are entering into joint ventures with housing associations to deliver both for sale and affordable housing.

2014 could present many new opportunities. Good luck and happy new year.

Steve Douglas is a partner at Altair